The social security trust fund is projected to deplete its funds, leading to automatic cuts in retirement and disability benefits within six years. Experts believe that these financial issues can be addressed if lawmakers are willing to take some difficult actions.
The latest report from the Trustees indicates that the program’s finances are strained due to an aging population, declining immigration, and tax changes. However, unlike some financial concerns, the funding gaps in the retirement system could be resolved by increasing taxes, reducing benefits, or a mix of both, according to policy analysts.
Essentially, the discussion isn’t about whether Social Security can be preserved but rather about which groups of Americans should shoulder the burden of its preservation.
“This is fundamentally a math problem, not merely a political one,” remarked Karen Glenn, chief accountant at the Social Security Administration, during a recent conference about the program’s finances. “We must either boost income as projected, decrease benefits, or do a combination of both.”
There’s a pervasive misunderstanding that if Social Security fails, it would stop providing support to over 70 million Americans who rely on it for their income.
In reality, beneficiaries will still receive monthly payments, but those amounts—currently averaging $2,071—would see reductions of about $500, as indicated by a report from the Committee for a Responsible Federal Budget.
“This program is highly valued by many, making it tough to even think about cutting benefits,” stated Kathleen Romig, a Social Security expert at the Center on Budget and Policy Priorities, during the same call. “We need to seriously consider how to generate enough funds to continue providing these benefits, as that’s what people expect.”
Here are five suggestions for saving the program before it faces bankruptcy.
Remove the Social Security tax cap
Since the program’s inception in the 1930s, there have been tax caps in place. This cap shields income above a specific threshold from payroll taxes that sustain Social Security. As of 2026, that threshold is set at $184,500, exempting income above this from a 6.2% payroll tax for both employees and employers.
Various proposals have emerged to eliminate or reduce this cap, suggesting methods like gradually phasing it out or introducing a “donut hole,” which would exempt incomes between $184,500 and $250,000 (or possibly even $400,000) from payroll taxes, before reapplying taxes on earnings above those levels.
These suggestions could potentially cover between 22% and 67% of the program’s funding shortfalls, depending on the chosen strategy.
Increase payroll taxes
Payroll taxes largely support Social Security, but as the U.S. population ages and benefit payouts rise, the current revenue stream isn’t adequate to meet all obligations. Consequently, the program relies on trust funds to cover funding gaps.
One solution would be to raise payroll taxes to fill this gap. This year, the Social Security Administration estimated that addressing the program’s needs would necessitate a 4.6% increase in taxes. If shared between workers and employers, this could mean about 8.5% each, totaling 17%. Currently, the tax stands at 6.2% for both workers and employers combined.
It’s worth noting that raising payroll taxes could present a political challenge and likely face resistance from businesses and employees alike, experts believe.
“Payroll taxes for these programs could edge towards 20%,” mentioned Jason Fichtner, a senior fellow at the Bipartisan Policy Center and former Social Security Administration official. “This could burden payroll significantly, negatively impacting employment and productivity.”
Another proposal suggests replacing employer payroll taxes with a flat tax rate, maintaining the current 6.2% rate but removing the cap and taxing all forms of employer compensation.
Estimates indicate that a 4.6% raise in payroll taxes could close the Social Security gap and generate $2.5 trillion over the next decade, potentially covering two-thirds of the shortfall.
Delaying retirement age
Republican lawmakers have pushed for raising the U.S. retirement age, arguing that with increased life expectancy, Americans should work longer. Yet research indicates that many individuals, due to various factors like health or job loss, actually stop working earlier than they intend, often around age 62.
In response to a previous financial crisis in 1983, lawmakers increased the full retirement age from 65 to 67 over 20 years for those born after 1960. However, elevating the retirement age again would decrease the years individuals could collect benefits, leading to further benefit reductions. A Congressional Budget Office analysis suggested that pushing the full retirement age to 69 might result in a 13% average cut in benefits.
Though such cuts may be preferable to a potential 22% reduction if Social Security collapses, many workers and retirees might resist such changes.
Depending on the speed and extent of the retirement age increase, this measure could cover 16% to 64% of the funding gap, according to Social Security Administration figures.
Reducing benefits for high-income individuals
Some experts have recommended modifying benefits for higher-income workers, suggesting they are more likely to have sufficient savings and retirement plans than lower-income individuals.
The 2025 Republican Study Committee has proposed altering the benefits formula for younger, high-income workers. This would spare those nearing retirement and those with lower incomes from the impacts, although specifics about ages or income brackets weren’t detailed.
Similarly, a team from the American Action Forum, a center-right think tank, suggested modifying the benefits for those earning around $90,000, resulting in cuts for this income bracket while leaving middle-income workers unaffected. For instance, someone making an average monthly salary of $10,000 might see a reduction of approximately $260 in their Social Security check.
Earlier this year, the CFRB suggested capping benefits for couples at $100,000.
Recommendations estimate that changing the formula for higher earners could close 9% of Social Security’s 75-year solvency gap, while capping benefits at $100,000 for couples might save up to $190 billion over ten years, potentially addressing at least 20% of the solvency gap.
Taxing investment income
Some commentators note that while Social Security relies on payroll taxes, investment incomes like capital gains and dividends go untaxed. This disproportionately advantages the wealthiest individuals, who currently pay no Social Security taxes on earnings exceeding $184,500.
In light of the recent Trustee’s report and significant technology IPOs, independent Sen. Bernie Sanders has advocated for new taxes on high earners to bolster Social Security. This would include a 12.4% tax on all investment and business income.
Labor economist Teresa Ghilarducci pointed out that revenue from large technology IPOs could substantially support Social Security if taxed correctly. “We could solve this problem now,” she added.
Some estimates suggest that Senator Sanders’ proposal could fully resolve the funding shortfall for Social Security.
